Growth projections for Africa often rest on the unspoken assumption that Chinese growth will continue to be strong enough to underpin investment in the continent as well as demand for its raw materials. What happens if that assumption turns out to be false?
According to research by Capital Economics in April, the best of the Chinese growth story may already behind us. China’s GDP growth will slow to 2% by 2030, the piece argues, as a declining working-age population will reduce employment and cause weaker productivity growth. Chinese growth in the 2020s will average about 3%, falling to 1.5% in the 2030s, Capital Economics predicts. That will entail a shift from investment to consumer spending, which will mean lower commodity prices.
Charles Robertson, chief economist at Renaissance Capital, is even more pessimistic on a medium-term horizon. His model shows a 2% decline in Chinese GDP in 2023, triggering a global recession. Nearly everywhere in Africa would suffer, he argues, but the most closed economies with the least commodity exports to China, such as Egypt and Ethiopia, would stand up the best. Angola is likely to suffer more than Nigeria, Robertson says, while Morocco might be relatively insulated as it trades mostly with European Union (EU) – but the EU would be hurting too.
According to the China Africa Research Initiative at John Hopkins University, the largest African exporter to China in 2017 was Angola, followed by South Africa, the Republic of Congo and the Democratic Republic of Congo (DRC). Countries with little Chinese trade include Algeria and Cameroon, the data show.
– The full article is available here.